GBP/AUD Trading at 2.05
After a quiet period over Christmas and New Year, GBP/AUD has started 2016 on a choppy note as concerns over the Chinese economy continue to dictate movement in the Australian dollar. The graph below shows GBP/AUD movement over the last 7 days. The graph below demonstrates a movement of around 1.5% between the highs and the lows.
GBP/AUD exchange rate graph
The Aussie started the week on the back foot, losing around 2% on Monday night as the Chinese stock market slumped 7% on Monday. The Australian dollar, along with other commodity currencies, will often trade dependent on economic conditions or data releases from China. Most of Australia’s iron-ore, it’s main export, is shipped to Chinese ports, used there to manufacture steel and fuel the enormous Chinese manufacturing industry. As China’s manufacturing sector began slowing in 2015, the Australian dollar weakened accordingly.
After the initial slump, the Aussie clawed back some of the lost ground after the latest ANZ/Roy Morgan weekly confidence survey, which climbed 0.8%.
“Australian consumer confidence remains in a gradual uptrend, evident since the change of political leadership at the federal level in September last year and is starting 2016 a few percentage points above its long-run average,” said ANZ chief economist Warren Hogan.
“Stronger employment conditions and the falling petrol price appear to be the major factors driving consumer optimism,” he said.
The GBP/AUD cross should be an interesting one to watch over the course of 2016. The economic situation in China will be closely followed, as will the situation in the UK. The Bank of England have been talking about a potential interest rate rise for the last few years. As the economic data in the UK continues to improve, speculation will inevitably mount and we may well see a significant strengthening of the pound over the course of the year. Of course, the opposite may be true and we may see the economic conditions worsen as the UK faces global economic headwinds coupled with the threat of a potential ‘Brexit’ from the EU. Only time will tell.
Do you need to buy or sell Australian dollars?
If you need to buy or sell Australian dollars, or any other major currency, contact me today for a free, no obligation consultation by completing the contact form on the right hand side of the page or call me directly on + 44 1442 892 062.